The sequester, explained
Posted by Suzy Khimm
on September 14, 2012 at 2:35 pm

The White House has released its plan explaining how the sequester’s mandatory spending cuts to defense and domestic spending will be implemented in 2013. Here’s the background on what the sequester is, how it happened and what happens from here:

What is the sequester?

It’s a package of automatic spending cuts that’s part of the Budget Control Act (BCA), which was passed in August 2011. The cuts, which are projected to total $1.2 trillion, are scheduled to begin in 2013 and end in 2021, evenly divided over the nine-year period. The cuts are also evenly split between defense spending — with spending on wars exempt — and discretionary domestic spending, which exempts most spending on entitlements like Social Security and Medicaid, as the Bipartisan Policy Center explains. The total cuts for 2013 will be $109 billion, according to the new White House report.

Under the BCA, the cuts were triggered to take effect beginning Jan. 1 if the supercommittee didn’t to agree to a $1.2 trillion deficit-reduction package by Nov. 23, 2011. The group failed to reach a deal, so the sequester was triggered.

Why does everyone hate the sequester so much?

Legislators don’t have any discretion with the across-the-board cuts: They are intended to hit all affected programs equally, though the cuts to individual areas will range from 7.6 percent to 9.6 percent (and 2 percent to Medicare providers). The indiscriminate pain is meant to pressure legislators into making a budget deal to avoid the cuts.

How would these cuts affect the country?

Since the details just came out, it’s not entirely clear yet. But many top defense officials have warned that the cuts will lead the military to be “hollowed out.” Democratic legislators have similarly warned about the impact on vital social programs. And defense, health care and other industries that are significantly dependent on federal spending say that major job losses will happen if the cuts end up taking effect.

At the same time, if legislators try to avoid the sequester without replacing it with real deficit reduction, the U.S. could face another credit downgrade.

Why did Congress and the White House agree to the sequester in the first place?

The government was approaching its debt limit, which needed to be raised through a congressional vote or else the country would default in early August 2011. While Democrats were in favor of a “clean” vote without strings attached, Republicans were demanding substantial cuts in exchange for raising the debt limit.

President Obama and congressional leaders ultimately agreed to the BCA, which would allow the debt ceiling to be raised by $2.1 trillion in exchange for the establishment of the supercommittee tied to the fall-back sequester, as the Center for Budget and Policy Priorities explains. The deal also includes mandatory spending reductions on top of the sequester by putting caps on non-entitlement discretionary spending that will reduce funding by $1 trillion by 2021.

Who supported the debt-ceiling deal?

Party leaders, the White House and most members of Congress supported the debt-ceiling deal: The BCA passed on a 268-161 vote in the House, with about one-third of House Republicans and half of House Democrats opposing it. It passed in the Senate, 74-26, with six Democratic senators and 19 Republican senators opposing it.

Can the sequester be avoided?

Yes, but only if Congress passes another budget deal that would achieve at least $1.2 trillion in deficit reduction. Both Democrats and Republicans have offered proposals to do so, but there still isn’t much progress on a deal. The political obstacles are the same as during the supercommittee negotiations: Republicans don’t want to raise taxes to generate revenue, while Democrats are reluctant to make dramatic changes to entitlement programs to achieve savings.

What happens from here?

No one on Capitol Hill thinks any deal will happen before Election Day. After Nov. 6, Congress will have just a few weeks to come up with an alternative to the sequester. The challenge is complicated by the fact that the Bush tax cuts, the payroll tax, unemployment benefits and a host of other tax breaks are all scheduled to expire Dec. 31. The cumulative impact of all of these scheduled cuts and changes is what’s popularly known as the fiscal cliff. There’s already talk of passing a short-term stopgap budget plan during the lame-duck session to buy legislators more time to come up with a grand bargain.

That's fine if it's your definition of balance. That doesn't mean I have to adopt it. If Obama meant 1:1 during the campaign, it was kind of misleading (given the previous attempts to reach a compromise with congressional Republicans), but it's at least a plausible argument.

Of course, Republicans aren't obligated to sign on to whatever it is that he meant. He should be held to his campaign statements not the GOP.

__________________

“The American people are tired of liars and people who pretend to be something they’re not.” - Hillary Clinton

it isn't the ratio so much (although i agree with you that 1:1 won't get it done) as what it is that's being cut and what impact will that have on us as a nation...

any serious tax reform will generate new revenues which can be used as a measuring stick to further reduce costs/spending...

personally, i don't care for hard and fast ratios, we should cut wherever we can without serious consequences and at the same time continue short term spending (maybe even a stimulus package) in critical areas like education, infrastructure, r&d, etc.

The Budget War Is Back
A familiar script: The GOP rejects Obama’s demand for new tax revenue in a short-term deal to avoid automatic spending cuts
By Steven T. Dennis
Feb. 5, 2013, 7:30 p.m.

The nation’s brief respite from the serial budget battles that have consumed Washington, D.C., is officially over, with President Barack Obama’s Tuesday demand for new tax revenue in a short-term deal to avoid automatic spending cuts at the beginning of March.

In an appearance in the Brady Press Briefing Room, Obama once again tried to use the bully pulpit to paint the GOP into a corner, using the same fairness playbook that helped him win re-election and a victory on tax rates during the fiscal-cliff deal. This time, the scale may be smaller but the game is the same — in the president’s eyes, either congressional Republicans agree to more new tax revenue or they will bear responsibility for the economic damage and hundreds of thousands of lost jobs from the sequester taking effect.

With the debt ceiling out of the way until May and likely even later, the coming showdown over the sequester is now the main event, albeit one with less of a sense of urgency than a potential default on U.S. government obligations, the fiscal cliff or even an old-fashioned government shutdown.

Both parties seem prepared to test each other’s political pain threshold when it comes to the across-the-board cuts taking effect. There is little evidence of fresh bipartisan talks to avert the cuts, and both parties, once again, are split on the perennially thorny question of taxes. Additionally, some Republicans have hinted they would rather let the cuts go into effect than negotiate any higher taxes with the White House.

After the fiscal-cliff deal netted Obama more than $600 billion in revenue over the next decade from the wealthy, Republicans declared they would not agree to more in future talks. But the White House has made clear it sees the fiscal-cliff deal as only half of a $1.2 trillion tax increase it’d like to see.

On Tuesday, Obama said he wants more revenue even in a short-term package to avert the sequester — which would cut $85 billion in federal spending for the rest of this fiscal year and about $1.2 trillion over the coming decade.

“They should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months,” Obama said. He said there was no reason the economy “should be put in jeopardy just because folks in Washington couldn’t come together to eliminate a few special-interest tax loopholes or government programs that we agree need some reform.”

Obama didn’t lay out a specific plan, beyond saying that his grand bargain offer made in December remained on the table, and Press Secretary Jay Carney named assorted tax breaks the president has sought to eliminate, including those on carried interest, corporate jets, oil companies and others.

But Republicans dismissed the idea even before he spoke.

“We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes,” Speaker John A. Boehner, R-Ohio, said. “The president’s sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.”

Ways and Means Chairman Dave Camp, R-Mich., dismissed the proposal as “nothing more than another tax hike to pay for more Washington spending.”

While Americans for Tax Reform President Grover Norquist blessed the New Year’s fiscal-cliff deal as a way to prevent a larger, automatic tax hike, any tax increases at this point would certainly be considered a violation of ATR’s no-new-taxes pledge, which most congressional Republicans have signed.

The sequester, included in the August 2011 debt limit deal between the White House and Congress, would cut about $43 billion from Pentagon spending and $26 billion from nondefense discretionary programs in the next seven months of the fiscal year.

Those cuts are now due to hit in March because the fiscal-cliff deal delayed them for two months. But the White House said the uncertainty leading up to the original Jan. 2 deadline already had an effect on the economy toward the end of last year.

The White House last week said uncertainty contributed to a 0.1 percent decline in the gross domestic product in the fourth quarter — an unexpected decline, led in part by falling federal spending.

Obama emphasized at the White House that although the economy is poised to strengthen this year, it should not have to absorb another “self-inflicted wound.”

Boehner earlier Tuesday noted that the House in the previous Congress passed plans to replace the sequester. “It’s time for the Senate Democrats to do their work. It’s time for the president to offer his ideas for how to replace the sequester.”

The Senate did not take up the bills the House passed last year because Democrats said the proposals targeted domestic discretionary spending while sparing defense programs and failing to bring in new revenue.

Senate Majority Leader Harry Reid, D-Nev., has said he hopes to pass a measure to replace the sequester but that it could come after the March 1 deadline passes. It is unclear how federal agencies would respond in their day-to-day operations, but other Democrats said Tuesday that they welcome the new White House approach in the meantime.

“If we can’t agree now on a long-term solution, the best thing for families and the economy would be to pass a balanced short-term sequestration replacement while the House and Senate work on our budget resolutions,” Senate Budget Chairwoman Patty Murray, D-Wash., said.

But while Senate Finance Chairman Max Baucus, D-Mont., signed on to the president’s call for more revenue, he expressed concerns about the effect Obama’s short-term fix might have on a broader tax overhaul effort in Congress.

“When it comes to tax reform, we must avoid the urge for the quick fix,” Baucus said. “We are not going to have multiple bites at this apple. I want to ensure that when we do tax reform, we do it right.”

*** Budget battle resumes: Goodbye fiscal cliff and debt ceiling; hello to the effort to delay or suspend the sequester -- the automatic defense and other spending cuts set to take effect on March 1. Roll Call: “This time, the scale may be smaller but the game is the same — in the president’s eyes, either congressional Republicans agree to more new tax revenue or they will bear responsibility for the economic damage and hundreds of thousands of lost jobs from the sequester taking effect.” In his brief remarks yesterday, President Obama tried to send two other messages besides the demand for more revenue to delay the sequester. First, the White House wants to dispel the notion that it’s comfortable with the sequester, something that many Democrats (and some Republicans) thought was NOT clear. “Deep, indiscriminate cuts to things like education and training, energy and national security will cost us jobs, and it will slow down our recovery,” Obama said. Second, Obama signaled that once the sequester is delayed, he wants Congress to work its will resolving the outstanding budget issues. “Congress is already working towards a budget that would permanently replace the sequester. At the very least, we should give them the chance to come up with this budget instead of making indiscriminate cuts now that will cost us jobs and significantly slow down our recovery.” What does this mean? The White House is prepared to see Congress work the old-fashioned way: The Senate passes a budget (with White House input), the House passes a budget (maybe all of this done before the August recess at the latest), and then the House and Senate actually negotiate a budget to send to the president for his signature. So no more Boehner-Obama talks, no more Biden-McConnell discussions.

I wonder how Obama feels about having his 2nd term destroyed in it's infancy by a recession.

Can you not read the political tea leaves? The Republicans will cave.

And if not over 60% of the public want a balanced approach. The Republicans need to work with Obama for the good of the country. If it doesn't happen the Republicans will get the majority of the blame. It's in the Republicans self interest if they don't give a shit about what they do to the country with another BS budget battle.

The deficit is not that big of a deal right now. The % of GDP has gone way down since the first 6 months of the Obama presidency.

We can't cut our way out of the deficit. We need to grow our way out of this.

And if not over 60% of the public want a balanced approach. The Republicans need to work with Obama for the good of the country. If it doesn't happen the Republicans will get the majority of the blame. It's in the Republicans self interest if they don't give a shit about what they do to the country with another BS budget battle.

The deficit is not that big of a deal right now. The % of GDP has gone way down since the first 6 months of the Obama presidency.

We can't cut our way out of the deficit. We need to grow our way out of this.

We can't tax our way out of the deficit. We need to grow our way out of this.

__________________

“The American people are tired of liars and people who pretend to be something they’re not.” - Hillary Clinton

We can't tax our way out of the deficit. We need to grow our way out of this.

That said, there are cuts that should be made, starting with what remains of the wild spending spree Obama went on when he first took office followed closely by entitlements.

Tax reform should happen too, but we need the opposite kind of tax reform as what Obama wants. He prefers higher rates with targeted tax cuts (aka loopholes) that allow the government to manipulate the economy. Republicans, most rational economists, and the Bowles-Simpson commission prefer lower rates with fewer targeted tax cuts.

__________________

“The American people are tired of liars and people who pretend to be something they’re not.” - Hillary Clinton

The three plans to stop the sequester
Posted by Brad Plumer
on February 6, 2013 at 10:44 am

On March 1, a whole bunch of deep, automatic spending cuts are scheduled to take effect. This is known as the "sequester," a mechanism that will trim the federal government’s budget by $85.3 billion this year and by $1.2 trillion over 10 years.

The trouble is, few people in Washington actually want these cuts. They were designed to be sweeping and crude — affecting everything except Social Security, Medicaid, a few anti-poverty programs, and the ongoing wars. Republicans don’t like the fact that the Pentagon’s budget gets slashed 7.3 percent this year. Democrats don’t like the sweeping, across-the-board hacks to government agencies.

As such, many members of Congress would prefer to replace the sequester with something else. Here are a few of the ideas out there:

1) The old House GOP plan: Eliminate other government programs to replace the sequester cuts.

Back in the last Congress, Republicans in the House narrowly approved the Spending Reduction Act of 2012, which would have replaced the defense cuts in the sequester with cuts to other parts of the government, particularly anti-poverty programs.

Here’s how it would work. The $55 billion in sequester defense cuts scheduled for 2013 would disappear. Instead, the GOP bill would have trimmed spending from elsewhere in the budget — shrinking the expanded food-stamp program that was expanded as part of the stimulus, for instance.

The bill would also make further cuts to various programs over the next 10 years. For instance, it would eliminate the $11.4 billion public-health fund in Obamacare as well as cut the Social Services Block Grant program (which funds, among other things, meals on wheels for seniors.) All told, the Congressional Budget Office estimated that the House bill would have cut the deficit by about $1.4 trillion over the next 10 years, compared with $1.2 trillion from the sequester.

The hitch? This bill was voted on in 2012 and it’s unclear whether it can win a vote in the new Congress. House Republicans say they have no plans to vote on the bill this time around. Also, the White House flatly opposes this plan, saying that it would “hurt middle-class families.”

2) The House Democratic plan: Fend off the sequester for one year by raising taxes and cutting farm subsidies.

By contrast, House Democrats have put forward a plan to fend off the $85 billion in sequester cuts for 2013. The spending cuts for subsequent years would be allowed to stand.

But the bill wouldn’t affect the deficit at all. Democrats would pay for that $85 billion through a mix of different cuts and taxes: Cut a farm-subsidy program that offers direct payments to farmers. Raise premiums on the National Flood Insurance Program. Implement a minimum tax for income over $1 million. And eliminate various tax deductions that benefit oil and gas companies.

Most of these taxes and spending cuts would be spread out over 10 years. So Van Hollen’s bill would essentially give the budget — and the U.S. economy — some breathing room in 2013 and postpone deficit reduction until later on.

The hitch? Republicans in the House aren’t fans of this idea. Just this week, Van Hollen’s bill was rejected by the House Rules Committee.

3) President Obama’s (vague) plan to fend off the sequester for a short while with a smaller package of cuts and tax reforms.

President Obama hasn’t really offered specifics on how he’d deal with the sequester. But for the record, here’s what he said Tuesday:

Quote:

Obama did not outline a specific proposal, and he said he still favored a broad deal of spending cuts and tax changes — which would eliminate deductions and loopholes that benefit the wealthy and certain industries — to replace the sequester.

“If Congress can’t act immediately on a bigger package, if they can’t get a bigger package done by the time the sequester is scheduled to go into effect,” Obama said in the White House briefing room, “then I believe that they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months.”

That sounds like a smaller, more modest version of the Van Hollen plan. But without specifics, it’s hard to say.

HAPPENING TODAY: GOP TO OFFER SEQUESTER COUNTER-PLAN — Top Republicans on HASC and SASC are unveiling their own plan to delay sequestration through offsetting reductions in the federal workforce — similar to a proposal HASC chairman Buck McKeon has been pushing for more than a year, to no avail. At a 1:45 p.m. news conference, McKeon and SASC Republican Kelly Ayotte will outline their plan to pay for about a year’s worth of sequester cuts through a 10-percent reduction in the federal workforce, achieved entirely through attrition, according to a Senate aide.

Several top GOP defense lawmakers will also be on hand this afternoon to voice support for the plan, including SASC ranking member Jim Inhofe, SASC members John McCain and Lindsey Graham, HASC Vice Chairman Mac Thornberry and HASC member Mike Turner.

OBAMA’S PLAN DEAD ON ARRIVAL? Today’s GOP proposal comes in response to President Barack Obama’s call yesterday for members of Congress to once again delay sequestration through a mix of tax hikes and spending reductions — a plan that had Republican leaders balking. “I’m flabbergasted,” McKeon told POLITICO ahead of the president’s speech. “Until he addresses the real problem, which is mandatory spending, he’s just whistling in the wind.”